Judgment

HEGDE, J. :- In this appeal by special leave, the question that arises for decision relate to the taxability under Section 10 (5A) of the Indian Income-tax Act, 1922 (in brief the Act ) of a certain amount received by the assessee firm as compensation on the termination of its managing agency.

2. The assessee is a private Limited Company and at the relevant time, it was under voluntary liquidation. It was incorporated in June, 1945 by converting an erstwhile partnership firm into a Private Limited company. The partnership firm had entered into a managing agency agreement on June 15, 1933 with a Public Limited Company called "The Century Spinning and Manufacturing Co. Ltd." Under the said agreement, the assessee was to continue as managing agents for a minimum period of 21 years and thereafter until that firm chose to resign its office or is removed from office by the managed company. During the period of 21 years stipulated in the agreement, the managed company had no right to remove the managing firm from its office except for reasons mentioned in the agreement. During the period the assessee continued to act as the managing agent the agreement provided, that the managing